The Little Utility That Could

Warren McKenna, the Manager of Farmers Electric Coop in Kalona, Iowa is a soft spoken fellow. However, it only took one sentence to bring an auditorium full of solar installers and electrical contractors to their feet for a standing ovation.

After a full day of presentations from state and local leaders on solar energy at the Iowa Solar Installers Summit in 2009, McKenna presented on a panel along with representatives of investor-owned and municipal utilities. When McKenna took to the podium, he smiled, cleared his throat and said, “Well, I don’t have a powerpoint presentation. But I DO have a feed-in tariff!” The crowd roared with approval.

Warren McKenna of FEC photo:presscitizen.com

Since 2008, Farmers Electric Coop (FEC) has been a national model for utilization of solar. The tiny, 650 person cooperative electric utility serves customers in the heart of Amish country and is the states oldest electric utility, but despite its long history, FEC is leading the way into the future. McKenna’s savvy, cost-effective approach to providing clean, locally produced power has caught the attention of much larger utilities across the country, and his start-small, pay-as-you-go business plan has proven to be a hit with co-op members as well as the solar industry.

FEC has a multi-tiered approach to reaching its goal of 15% renewable energy by 2025. First, co-op members can contribute $3 per month to a voluntary program that helps offset the cost of their solar feed-in tariff for local members who want to install solar. It also pays for biodiesel for their back-up generators.

Next, McKenna began training his own in-house team to keep installation costs low. FECs own licensed electricians started by installing some small projects, including 1.8 kW at two local schools, and at McKenna’s own home, proving that McKenna was willing to put his own money where his mouth is. “I might be the only utility manager in the nation that gets all of his kwhrs from the sun.”

The FEC feed-in tariff (FIT) was one of the first of it’s kind in the nation. Co-op members who own their own solar arrays get two electric meters, one to measure their consumption and the other to track monthly solar generation. For solar production up to 100% of monthly use, the credit is determined at the cooperative’s retail rate. Production above and beyond 100% of the members monthly use is paid a rate of $0.06/kWh. The FIT has a term of 10 years, which allows the producer to pay down the system faster, and guarantees the utility less expensive solar generation (between $0.08 and $0.10/kWh) in the future.

Members also have the option of using solar rebates rather that the FIT. The rebates amount to $0.50 per watt up to a maximum of $2,500. The rebate option adds flexibility to the individual member and how they choose to finance their project.

After six years of research, training, number-crunching, planning and careful investments, McKenna quietly lead FEC to the top tier of the nation’s solar utilities. Last year, (2014) FEC opened the largest solar farm in Iowa. The 2,900-panel solar array is capable of generating more than a million kilowatt-hours a year. With the solar array, Farmers Electric Cooperative is capable of generating 1158 watts of solar per customer, putting it among the highest per-capita solar generation rates of all the utilities in the country. In fact, it provides more than double its next closest competitor, and only recently was passed up by the Pickwick Cooperative in Tennessee, which now generates 1679 watts per customer. The ranking of utilities come from a recent report from the Solar Electric Power Association (SEPA). But McKenna doesn’t plan on being #2 for very long. “By the end of 2015 we should exceed 2000 watts per customer.”

photo: 25X25blog

What’s in the future for Warren McKenna and FEC? “With the help of Iowa Solar Energy Trade Association we are working on passing Iowa PTC legislation to free up existing tax credits so that we can double the size of our solar farm… We started down this road doing experimental projects that proved successful. When we had consultants tell us the payback was 20 years and their recommendations weren’t favorable, the Board of Directors looked back at these first projects as proof that this technology worked and that we could count on it long term. The customer response and feedback has also supported our efforts to keep moving in the direction of adding even more locally sourced renewable energy. It’s been a win-win for the cooperative and its membership.”

FEC may be small, but their message is loud and clear. Like the innovators who started the Farmers Electric Cooperative to bring reliable electricity to rural residents in the last century, FEC continues to innovate, with a model that is leading the utility industry into the 21st century.